Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2: Hello and welcome to another episode of the Odd Lots Podcast.
Speaker 3: I'm Joe Wisenthal, and I'm Tracy Alloway.
Speaker 2: Tracy US exceptionalist. Like, to my mind, the big question
Speaker 2: for investors is, like we've had this fifteen year plus
Speaker 2: run of where it's like the only game in town
Speaker 2: has been you invested in the US, you did not
Speaker 2: get paid for diversification. Arguably, you didn't even get paid
Speaker 2: for diversification within the US because you should have just
Speaker 2: been in techtocs the entire time. Yeah, but I really
Speaker 2: feel like this is the moment where people are asking, like,
Speaker 2: is this one trade that's worked out so well? Is
Speaker 2: it coming to an end?
Speaker 3: You know what? I really like? I like talking about
Speaker 3: US exceptionalism in markets because no one immediately starts debating
Speaker 3: like the definition of US exceptionalism. That drives me crazy,
Speaker 3: right because in the broader realm of like just some
Speaker 3: politics or society or life, like, is the U s exciy?
Speaker 2: But in markets it's unambiguous. Yes, in markets it's unambiguous.
Speaker 2: The US assets have just been where you want to
Speaker 2: be for a long time.
Speaker 3: So not only have US equities outperformed recently, but they've
Speaker 3: really come to dominate the market as a whole, like
Speaker 3: as a proportion of the market. So the entire world,
Speaker 3: you know, even with US stocks falling recently, the entire
Speaker 3: world basically still has an overweight on America.
Speaker 2: The world is overweight. No, I mean, it's true, true.
Speaker 2: And if you're a global manager and your benchmark is
Speaker 2: the MSc, i AWS or whatever, you know, it's still
Speaker 2: in large party US trade. By the way, I was
Speaker 2: looking at the Bank of America Fund manager survey today,
Speaker 2: which is one of my favorites, and after two straight
Speaker 2: years of long mag seven being identified by fund manager
Speaker 2: Jersey is the perceived most crowded trade and this most
Speaker 2: recent month was gold, which was really interesting.
Speaker 3: So it's finally changed right after it. Yeah, that was
Speaker 3: the thing because like for years and years and years,
Speaker 3: everyone was like, oh fangs like big text, so crowded like,
Speaker 3: and the suggestion was don't even bother buying because the
Speaker 3: valuation is just so eyewatering at the moment. But in actuality,
Speaker 3: if you wanted to not even outperform, but like meet
Speaker 3: your benchmar that was the only trade was by tech.
Speaker 2: This is the true pain trade. Right, because it's like
Speaker 2: everybody is log tech, everybody is overweight tech. How could
Speaker 2: you make money buy tech? And yet you still had
Speaker 2: to buy tech just to keep up? And so now
Speaker 2: there's the question is the pain trade reverse? Because if
Speaker 2: there's so many people are so into tech and so
Speaker 2: into the US, can they actually make the risk and
Speaker 2: take the move of like, you know what, I'm going
Speaker 2: to overweigh Germany or I'm gonna buy Chinese stocks or
Speaker 2: whatever it is. And these are I think this is
Speaker 2: the moment where like you have to get this call right,
Speaker 2: This is the call of the.
Speaker 3: Moment, and you haven't really had to do that before.
Speaker 3: Now things are getting interested, right.
Speaker 2: We all know the backdrop of all this, so we
Speaker 2: don't really have to do that in the intro. But
Speaker 2: I'm very excited about our guests. We're still here in London.
Speaker 2: We are going to be speaking with Ozon Turman. Here's
Speaker 2: the vice chair of Global Macro at Deutsche Bank, and
Speaker 2: he talks and thinks about all of these questions with
Speaker 2: his clients all the time. They're going to get a
Speaker 2: slice of what he's thinking about. Ozon, thank you so much.
Speaker 2: Great to be here with you in person.
Speaker 4: Wonderful to be here. Honestly, I'm a big fan. I
Speaker 4: listen to you guys all the time. My clients and
Speaker 4: friends are big fens. Is great to be here. This
Speaker 4: is my hometown.
Speaker 2: This is very important to us. I say that we're
Speaker 2: sorry when no guests say this on the episode. We
Speaker 2: hate when they say it before the recording starts. He's like,
Speaker 2: that was a total waste. Do you agree with the
Speaker 2: premise that I set up that this is essentially the
Speaker 2: big question that everyone has to grapple with right now?
Speaker 2: In markets?
Speaker 4: We fought with doubts and quite tiringly.
Speaker 2: Sorry to exhausted, We're exhausted too.
Speaker 4: I mean we were very exhausted after deliberation day, but
Speaker 4: even before all that, we were exhausted from how wrong
Speaker 4: the whole jen to Gen twenty consensus went. Everybody and
Speaker 4: their brother were believing SMP would go anywhere between seven
Speaker 4: thousand to six thousand, five hundreds and ty US ten
Speaker 4: year would go to five percent. It kind of did,
Speaker 4: but for all the wrong reasons. And then Eurote the
Speaker 4: other right and everybody who's saying parity believe me politely,
Speaker 4: deep inside, they were believing zero point ninety five that
Speaker 4: dollar CNH would go to eight. I can go on
Speaker 4: and on and why right, First of all, this US exceptionalism,
Speaker 4: we can go into take it as well, But first
Speaker 4: and foremost it was about fiscal expansion. US was the one,
Speaker 4: the big one, printing the most, especially after the Homerican
Speaker 4: and on top yes, the Magnificent Seven, the wonderful Silicon
Speaker 4: Valley story, and belief that Germany, Europe and China, for
Speaker 4: different reasons, would never match the same fiscal ambitions. All
Speaker 4: these three things I mentioned are completely turned on their heads.
Speaker 4: From deep seek to Germany's one in fact one point
Speaker 4: one trillion, to China holding onto their currency and choosing
Speaker 4: more fiscal all the consensus traits and views are thrown
Speaker 4: into the water.
Speaker 3: It is true. In January we recorded that episode with
Speaker 3: the ECB's chief economist and it was basically about all
Speaker 3: the challenges facing Europe. And then like two months later,
Speaker 3: European stocks are surging. Everyone's getting very excited about that market.
Speaker 3: I have what I imagine might be a difficult question,
Speaker 3: but maybe it's not for you. How much of this
Speaker 3: has to do with things being really bad in the
Speaker 3: States versus things actually going well in Europe?
Speaker 4: I really like that question. It's not a difficult question.
Speaker 4: Actually it's a key question. At the very beginning of
Speaker 4: the year, it was more about the rest of the
Speaker 4: world doing such better than expected. Germany step is a
Speaker 4: huge step. After the election, I held a micro dinners
Speaker 4: in Frankfurt, as you do, and both are big cheeses.
Speaker 4: And some of our key clients really did not see
Speaker 4: this coming. Maybe three hundred billion, maybe four hundred billion,
Speaker 4: mainly on defense after the shocking mini but infrastructure, health,
Speaker 4: education was hardly mentioned. Something like one point one trillion.
Speaker 4: My head of rates trading was throwing that out as
Speaker 4: an idea, which was quickly pushed back. Then the Hamburg
Speaker 4: local elections happened and right away Merz came up with
Speaker 4: that numbers and before the new parliament sets in. That's
Speaker 4: sometimes these words hyper bowls are used too much, but
Speaker 4: that was a historic step on top of China deep seek.
Speaker 4: That was a big, big development. I mean I was
Speaker 4: jumping up and down on my Bloomberg on Saturday and
Speaker 4: Sunday of that weekend. Whatever you want to believe. I mean,
Speaker 4: maybe they'll do it for five, maybe they do it
Speaker 4: for fifty. They definitely don't do it for two billion
Speaker 4: or one trillion, right, So Deep Seek will change the
Speaker 4: world for Magnificent seven and all of us consumers. But
Speaker 4: then to Tracy's question, recently it's becoming more about us
Speaker 4: hurting itself, us hurting its soft power, US creating a
Speaker 4: confidence crisis in a way. With full respect to Scott Bessant,
Speaker 4: who's been a dear client friend as well, who's been
Speaker 4: to some of my New York mac readiners, when he
Speaker 4: says what mag seven goes through a court has got
Speaker 4: nothing to do with Mega is more about a deep
Speaker 4: seak issue, I would kindly disagree with that. Of course,
Speaker 4: Deep Seek, as I told you, has got many factors
Speaker 4: to do with it, but Tariff's much more than people expected,
Speaker 4: ended up shooting us on its own leg.
Speaker 2: Is Deep Seek about deep seak or is it a
Speaker 2: metonym for the rise of competitive Chinese tech?
Speaker 4: I think more for the letter, But my friends that
Speaker 4: I do trust in beyond the market yours from the
Speaker 4: start believed that it was It was real. Some things,
Speaker 4: it did much better than Chatchibt, and I think us
Speaker 4: since it has given me my education as well. The
Speaker 4: first reaction to it was the US. I know this
Speaker 4: is for real, it may help all of us. Let's compete.
Speaker 4: So in that sense it was good for humanity as well.
Speaker 4: But yes, that was the first step in the in
Speaker 4: this year in which China said hey, I'm here. Then
Speaker 4: the second big step was last Wednesday, I mean Joint
Speaker 4: Tracey last Wednesday, unfortunately, five six hours before this, when
Speaker 4: I woke up to see the China fix to see
Speaker 4: if they devalued big or not. And when I was
Speaker 4: leave to see they haven't, then I looked at US
Speaker 4: ten year as you do, and Euro dollar and then
Speaker 4: I didn't unfortunately sleep why.
Speaker 2: Because I didn't sleep that either. I was on my
Speaker 2: couch updating my Bloomberg gap on my phone, just looking at.
Speaker 4: Ten Imagine imagine if we did this one week, because
Speaker 4: US ten year had gone to four to fifty five
Speaker 4: and at the same time dollar was weakening. So even
Speaker 4: that Sunday, three days ago, I kind of knew this
Speaker 4: was the vibe. Some people were really worried about it,
Speaker 4: but I didn't see. I didn't see in two days
Speaker 4: dollar melting like that, and at the same time US
Speaker 4: long ends being basically lost ten and thirty. That is
Speaker 4: my troa. I grew up in emerging markets. My first
Speaker 4: responsibility was emerging markets again, no more hyperbole. That was
Speaker 4: emerging markets like trading that stage, you know, I almost
Speaker 4: wanted to shout out responsibility, like almost like an AMC
Speaker 4: to the market. Somebody needs to blink, somebody needs to come.
Speaker 4: I thought it could be fed and right that afternoon
Speaker 4: President blinked for the first time. Yeah.
Speaker 3: You know what else was very emerging markets e that week,
Speaker 3: you know, having policymakers calling for rate cuts when the
Speaker 3: dollar was falling and yields were growing up, like that
Speaker 3: is classic EM right, Well, I.
Speaker 2: Was thinking that if we were classic EM, wouldn't be
Speaker 2: IMF peoples be calling for rate hikes and cuts in
Speaker 2: that environment? Would they say, oh, you know, you need
Speaker 2: an independent central bank that like is committed to orthodoxy.
Speaker 2: You got a hike at these.
Speaker 4: Environment that, my friend, you guys are in London, We're honored. That, unfortunately,
Speaker 4: is the trust moment. We went through that in this
Speaker 4: island just three years ago. But even then, at the
Speaker 4: height of the panic, when quite justifiably somewhere calling for
Speaker 4: a hike, Bank of England instead chose que. At that
Speaker 4: time as well, people said, oh that may be inflation
Speaker 4: at the end, et cetera. But that ended up calming
Speaker 4: things down. I do believe, first of all, last week,
Speaker 4: if President didn't blink and tan year and thirty content
Speaker 4: to sell off with the dollars selling off em style,
Speaker 4: I think FED would have come definitely, and the QT
Speaker 4: I mean that we can talk about that. I think
Speaker 4: that they will do that right away in May anyway.
Speaker 4: But I think they would do q E as well,
Speaker 4: not cut. I think probably doesn't want to cut because
Speaker 4: of all the inflation growth dynamics, but they would have
Speaker 4: done that. And I don't agree with some of my
Speaker 4: dear client friends who say even QE inflationary wouldn't long
Speaker 4: and react to that even more. Maybe they are kindly
Speaker 4: talking their book if we have. If you go through
Speaker 4: that kind of episode, a QE may calm things down.
Speaker 4: But Trump blinked two or three times, so I'm not
Speaker 4: too sure. Famous last words, we'll go through that fat
Speaker 4: QI stage. Now. There's a big, big, big debate already
Speaker 4: in the market. Even though my dear friends are tighter
Speaker 4: than and wounded, do you play for the next leg
Speaker 4: to come one more quote unquote attack towards four fifty
Speaker 4: and higher in US ten year much more importantly five
Speaker 4: percent and higher in thirty years. Or do recession warriors
Speaker 4: and growth warries always outweigh Is it now when warriors peak?
Speaker 4: Is it now time to receive I kind of have
Speaker 4: a lean towards this the letter, and it has won
Speaker 4: by twenty five base points as I speak, So something
Speaker 4: may have become.
Speaker 3: One of the reasons we wanted to talk to you
Speaker 3: is because you are constantly speaking and arguing over these
Speaker 3: trading ideas with your clients. And I guess I'm curious
Speaker 3: about the arguing. Yes, I guess I'm curious. Is anyone
Speaker 3: buying the Trump administration argument that like, Okay, we're taking
Speaker 3: some short term pain in exchange for longer term better
Speaker 3: economic growth. Is that something that people like are actually
Speaker 3: positioning for. Is that resonating at all with your clients?
Speaker 4: Again, very good question. Up until mid February end of February,
Speaker 4: a lot of them did. Now, we don't think about it,
Speaker 4: but you know, you're at one, thirteen, one fifteen back
Speaker 4: then told even one ten year old was like, come on,
Speaker 4: you know, calm down, et cetera. Because people did believe
Speaker 4: tariffs have to be inflationary. Market is not believing market
Speaker 4: is not pricing it, that's why it's not happening, et cetera,
Speaker 4: et cetera. Then credibility started to become an issue when
Speaker 4: you start with Canada and Mexico, and when you don't
Speaker 4: mention China that much, then you decide to do something
Speaker 4: on Canada and Mexico even though market and most economists
Speaker 4: are revolting. You immediately step back, delayed for one month.
Speaker 4: You start losing credibility. Then people start relaxing about deliberation.
Speaker 4: Day you come up with this big sign with very
Speaker 4: you know, let's say creative way of calculating it, and
Speaker 4: you hit China and Asia the most. Then people say
Speaker 4: there's a credibility year.
Speaker 2: Actually this reminds me because you and I met for
Speaker 2: coffee in New York City like three or four weeks ago,
Speaker 2: and I think one of the comments at the time
Speaker 2: and now that this seems like ancient history, but the
Speaker 2: thinking at the time was like, oh, it's interesting. Trump
Speaker 2: is hammering care in Mexico a lot more rhetorically than
Speaker 2: he has China. Maybe he's gonna go easy on China.
Speaker 2: And I had forgotten that that was actually in the
Speaker 2: discourse even like three weeks ago.
Speaker 4: I do remember our conversation as well, and you made
Speaker 4: me think too because when I said, I still believe, like, look,
Speaker 4: I think for this year, this yours, us ex exceptions
Speaker 4: in trade is here to stay. It's not just a
Speaker 4: one quarter thing. Because that I heard a lot as well,
Speaker 4: was on good call. We like your blue mega hat,
Speaker 4: but it's just one month, it's just two months. This
Speaker 4: is just three months. Yea, well now it's one fifteen,
Speaker 4: et cetera. But then you told me, look, China, they're
Speaker 4: doing a lot better in ev and solar, they're tried
Speaker 4: starting to do better in in tech, in fiscal, so
Speaker 4: maybe we are not that exceptional after all you had
Speaker 4: told me. And then also on that going easy on China,
Speaker 4: he was trying to hide these cards. Then he went
Speaker 4: seventh years. But China is playing a good one if
Speaker 4: a lot of people back to that Wednesday when we
Speaker 4: didn't sleep, a lot of people fear that either that
Speaker 4: Wednesday or that Thursday, China would be value big. To
Speaker 4: be fair to both my research and trading Perry Malica,
Speaker 4: we really believe that people shouldn't exaggerate. They would hold
Speaker 4: they would hold the ground. And it was to their
Speaker 4: advantage to choose fiscal more so far so right that,
Speaker 4: and that also proving making things quite difficult for the president,
Speaker 4: Like even this morning, right I opened up, Okay, it's
Speaker 4: more colorful for Tracy and Joe. Not wonderful, but SMP
Speaker 4: down seventeen as back down three hundred and fifty. And
Speaker 4: then as I was walking to the tube, China may
Speaker 4: talk to you, guys if you show respect immediately smally
Speaker 4: seventy points.
Speaker 2: By the way for listeners. We were recording this Wednesday,
Speaker 2: April sixteenth. It is ten fifty eight London time, five
Speaker 2: fifty eight New York City time. We always have to
Speaker 2: get these in.
Speaker 1: Yeah.
Speaker 3: I think it's so funny. We actually have to include
Speaker 3: the exact time now, which we didn't have to do before.
Speaker 4: You usuld just do days. Yeah. I like that before ECB,
Speaker 4: before Pubble sticks in Chicago.
Speaker 3: Yeah, exactly. Well, okay, So on the tech front, one
Speaker 3: thing I don't get is so much of the American
Speaker 3: exceptionalism trade has been about AI enthusiasm and this idea
Speaker 3: that America has a head start and no real competitors,
Speaker 3: at least up until the unleashing slash arrival of Deep
Speaker 3: Seek in Europe. We still haven't really seen a real
Speaker 3: contender in the AI space. I think that's fair to say,
Speaker 3: And there has been this long running disappointment that Europe
Speaker 3: is just not where other places like the US and
Speaker 3: China are when it comes to cutting edge technology. That
Speaker 3: hasn't changed as far as I can tell, but it
Speaker 3: seems like investors are kind of willing to overlook that.
Speaker 3: Or maybe they think that US isolationist political policy and
Speaker 3: the idea that Europe is going to have to come
Speaker 3: together to fight Russia and you make up for a
Speaker 3: less active US. Maybe that's going to be the thing
Speaker 3: that sparks technological advance a.
Speaker 4: Bit of both. I think, first of all, especially Germany,
Speaker 4: about Europe can invent itself. That's going to take a
Speaker 4: little bit of time. In the meantime, things like ARNI media,
Speaker 4: so things like lvmh airms have to carry outs which
Speaker 4: didn't happen yesterday because of what's going on with China,
Speaker 4: so it will need time. At the moment, Europe does AI,
Speaker 4: but does the chips, like the part of the chips
Speaker 4: that helps the asmls and tsmcs of the world. Germany
Speaker 4: doesn't necessarily have its own asml SO. But at the
Speaker 4: same time, yeah, this is a country, at least the
Speaker 4: country Germany, but overall continent that has shown that it
Speaker 4: can reinvent itself. It's not going to happen in two
Speaker 4: three months. But all these for the pass, all these
Speaker 4: unforced errors America is making, is giving the old continent sometime.
Speaker 2: Europe is arguably now the leading I mean with that
Speaker 2: clearly the most advanced place in the world for aerospace technology.
Speaker 2: And we had those headlines today. Are sorry yesterday about
Speaker 2: China halting deliveries of Boeing. Already Boeing was falling behind
Speaker 2: airba Is, largely due to operational problems. There is clearly
Speaker 2: still some just sort of like classical industrial might on
Speaker 2: the continent. Much of an aerospace probably you know, engines,
Speaker 2: other parts that feel like areas for potential further growth.
Speaker 4: Agreed. Look, I go back and forth between three categories.
Speaker 4: Two categories. Category one is you know, after having a
Speaker 4: great four month, I'll be wrong. US exceptionalism will be
Speaker 4: fully back. This was all a joke America, America. Yeah.
Speaker 4: Category two for reasons like you outlined, Europe European industrialism,
Speaker 4: China will continue to lead the lead the pack. To
Speaker 4: be honest, it's going much better than I would have taught.
Speaker 4: This much outperformance didn't happened since nineteen eighty, et cetera.
Speaker 4: It's going to be continued team and Category three USA
Speaker 4: in America will take everything down. It will be such
Speaker 4: a sea is confidence the market crisis that with all
Speaker 4: the respect to European aerospace, is that the Danish.
Speaker 2: Kill Globar place.
Speaker 4: I go back on how can you not you go
Speaker 4: back and forth these three or two categories. My gut
Speaker 4: feel and reasoning still is that category to the broad
Speaker 4: team of twenty twenty five will win because why I
Speaker 4: think President will continue to blink. And also I have
Speaker 4: a backstop now. I do believe if things get very
Speaker 4: ugly five percent and more US thirty or ugly in
Speaker 4: US said will come with with Q At this Collins
Speaker 4: last Friday, she gave a hint. She said the one
Speaker 4: more world fear ambitiously whatever the world. She didn't just
Speaker 4: say watching We're definitely what she was the first one
Speaker 4: to give. Most investors believe that they could come with
Speaker 4: more steps. And then Waller. I know that now Waller
Speaker 4: people are half joking about is he really saying it
Speaker 4: or is he love being for the job? Yeah, yeah,
Speaker 4: but he's you know, he's I think he does believe it.
Speaker 4: He's a respected man, and he did hint that cuts
Speaker 4: can be frontloaded if things get uglier. So, first of all,
Speaker 4: I believe blinks will continue from the White House. But
Speaker 4: even if they don't, I think we have the backing
Speaker 4: of the of the FED.
Speaker 3: You know, I mentioned in the intro this idea that
Speaker 3: the world has sort of de facto overweight the US
Speaker 3: just because of the it's the market size and it's
Speaker 3: waiting in a bunch of different benchmarks. Does that provide
Speaker 3: like some cushion for US equities selling off, like the
Speaker 3: fact that you do have index investors, passive investors that
Speaker 3: have to be hugging a certain benchmark which happens to
Speaker 3: be filled with a lot of American equities.
Speaker 4: Completely agreed exactly, Tracy. In a simple way of putting it.
Speaker 4: I was discussing with a senior colleague yesterday. This is
Speaker 4: great because let's go right into that real location, the
Speaker 4: big team. Right, if big players were really in the
Speaker 4: big sense of the world with a big r reallocating
Speaker 4: away from the US, there will be a lot of
Speaker 4: circuit breakers in a SMP. I don't want to sound,
Speaker 4: but that is the know it would be. I'm not
Speaker 4: sure how SMP would open tomorrow morning. So there's a
Speaker 4: difference between even these big real money so well funds
Speaker 4: trading in their own time zone and making much bigger,
Speaker 4: much longer dated decisions. So I think this letter it's more.
Speaker 4: We do want headlines, especially of emerging markets effects people.
Speaker 4: We do get excited, but through through through big reallocation,
Speaker 4: I don't think we're there yet. That being said, there
Speaker 4: are trades, so this big it's not just my wonderful
Speaker 4: dhe funds friends fast money getting what's the world trump
Speaker 4: us queasy, It's beyond its yippy, it's it's it's more
Speaker 4: serious than that.
Speaker 2: Yeah, No, Tracy wrote a great note about that yesterday
Speaker 2: or the day before. I can't track. It's like there's
Speaker 2: like real money, real money actually moving away.
Speaker 4: You know.
Speaker 2: Everyone looks for analogies to pass experiences, and this like
Speaker 2: is this like great financial crisis? Is there like a
Speaker 2: run element? Is this like COVID where it's a supply shop?
Speaker 2: Next element is this like the Liz Trust. A moment
Speaker 2: where I don't really like the term because I don't
Speaker 2: like insulting people. But you hear that term more on
Speaker 2: risk premium exists. The other you know, when when you
Speaker 2: describe okay, what if the FED comes into backstop. Another
Speaker 2: possibility is a Brexit analogy in which there's not an
Speaker 2: immediate crisis. Really is just the start of a slow
Speaker 2: degradation of the economy. It sounds like when you're in
Speaker 2: that number two spot where it's like, okay, there's some
Speaker 2: blinking going on, there's some FED backstopping going on. That
Speaker 2: it may be that is the analogy perhaps that we
Speaker 2: should be thinking.
Speaker 4: I mean, soft powerty is being eroded my alma mater.
Speaker 4: I'm biased on the issue about Harvard headlines, right, that
Speaker 4: doesn't help the global perception, whatever your politics is. So
Speaker 4: in that sense. In fact, when I was trying to
Speaker 4: get some sympathy from some clients while you know, forwarding
Speaker 4: around the Harvard headlines, one of them did say, did
Speaker 4: say immediate answered US's breaks it moments to your point.
Speaker 4: So for it to get more cious, uglier and GFC
Speaker 4: like that than that is the big world. DM credits
Speaker 4: them credit that needs to shake for it to become
Speaker 4: you know that For a bit more online length.
Speaker 3: What's the trade Because we can all sit here and
Speaker 3: talk about these big macro themes like American exceptionalism, but
Speaker 3: like you know, given some of the restrictions on large investors,
Speaker 3: and given the reality of trading in certain markets, like
Speaker 3: you know, Chinese assets, what exactly do you do here?
Speaker 4: I think, Look, first of all, I do believe forty
Speaker 4: eight fifty in SMP may may have been a base
Speaker 4: of floor. Even if I'm wrong on that, if we
Speaker 4: go down towards that very fast, more fate blinking and
Speaker 4: c will come very fast. So I think it will
Speaker 4: bounce very very fast that I will forget that I
Speaker 4: was wrong. I continue to believe Europe and China has
Speaker 4: a lot of fiscal rooms. So I feel at the
Speaker 4: moment quite confident that Ducks MDX, the medium caps and
Speaker 4: China take will continue to weigh out for utperformed us
Speaker 4: on race we had started discussing with Joe. I do
Speaker 4: have sympathy that receivers from here. On the long end,
Speaker 4: it will work that maybe that may be a big trade.
Speaker 4: Actually talking about despite tiredness and wound wounds, a crowded trade,
Speaker 4: scheapness still crowded because on paper, it does make sense,
Speaker 4: you know, for different reasons for US and Europe. But
Speaker 4: short end may may stay, may stay lower, and long
Speaker 4: end may get may get sold off more on that one.
Speaker 4: So I think flattened at that certain stage may give
Speaker 4: pain to people. ECB for example, Okay, she will cut tomorrow,
Speaker 4: but I don't think there's so many unknowns right how
Speaker 4: the tariff negotiations will go, et cetera. On June. She
Speaker 4: will not blink. She will not give you the hint
Speaker 4: that this will continue on June. And if people started
Speaker 4: getting worried about the June skip there you go. That's
Speaker 4: not gonna help your steepener. Our official call is that
Speaker 4: terminal rate in Europe is all the way down to
Speaker 4: one point five my excellent chief economists marked world does
Speaker 4: get pushed back from that in Spains and Italy is
Speaker 4: of the world, even before the recent developments and even
Speaker 4: before you went to one thirteen soft dollars. Look, we're
Speaker 4: talking big levels on on euro on end, on on swissy,
Speaker 4: on gold. But my bias is still to sell any
Speaker 4: dollar allies.
Speaker 2: So we're talking about that Wednesday night when dollar was telling.
Speaker 4: Off morning Wednesday morning, las Wednesday morning actually was for me.
Speaker 2: It was Tuesday night, but I mean it spends tesday night,
Speaker 2: Tuesday night.
Speaker 4: We all know, we all know what's luckier to you.
Speaker 2: Yeah, yeah, I was upload that was the that was
Speaker 2: the Tuesday night. I didn't get any sleepy. And as
Speaker 2: you said, this is you're like, this is em style trading,
Speaker 2: right when you see all three equities, treasuries and the
Speaker 2: dollar going down. If we were actually talking about the
Speaker 2: US as an em if you're an analyst, as a
Speaker 2: you know, uh, cell set talk, there would be a
Speaker 2: lot more you know, there'd be a lot of talk
Speaker 2: about politics and how politics works. And you know what
Speaker 2: is it is? There is there an independent central bank,
Speaker 2: et cetera. Like how much of the conversation is really
Speaker 2: becoming about stability of just like the sort of internal workings.
Speaker 3: Political order, institutional strength again, radiated elements.
Speaker 4: I mean, in that kind of sense, if we half
Speaker 4: revisits that your Tuesday night and if President sends five
Speaker 4: more tweets about foot cut right away, not good. Some
Speaker 4: people even believe on the Friday speech, I don't know
Speaker 4: now two weeks before, if President didn't tweet five minutes
Speaker 4: before the guy spoke, I mean conspiracy theory, but maybe
Speaker 4: he wouldn't. He wouldn't prefer inflation that much over growth.
Speaker 4: So if you create that kind of fed independency question mark,
Speaker 4: it's not gonna help your It's not gonna help your
Speaker 4: trade at this moment, talking about them. If this thing
Speaker 4: goes like this, America needs friends, America finance needs friends.
Speaker 4: Powell and Bestent when they auction need friends. So talking
Speaker 4: about the m right whenever the president these days, things
Speaker 4: can change. As a very successful political person, needless to say,
Speaker 4: but as of now, whatever the topic is, from tariffs
Speaker 4: to Powell to Harvard, when he talks and writes too
Speaker 4: much about an issue, it doesn't help with this capital
Speaker 4: Tracy's capital allocation situation. Real money sells dollars mathematics, and
Speaker 4: at the moment he needs real money to buy his dogs.
Speaker 3: I'm not going to say that the US is an
Speaker 3: emerging market, but I am going to ask you, with
Speaker 3: all of your emerging market experience, what advice do you
Speaker 3: have for people who are trying to trade the US
Speaker 3: at the moment.
Speaker 4: I mean, watch the three key people, Trump, Powell, She
Speaker 4: who's going to blink when I think that would be
Speaker 4: my advice? Even a week ago, Trump already showed that
Speaker 4: maybe he has less cars. He's blinking. Then the second
Speaker 4: thing is, you know, I mentioned Collins, I mentioned Wohlers
Speaker 4: and not Cuts. But I do believe that Qis is
Speaker 4: out there, so I think we have the backing off
Speaker 4: the Fed. And then finally she even though okay, he
Speaker 4: has the cards, but this is not good. Right, at
Speaker 4: some stage they need to talk even the basic what
Speaker 4: we quote unquote expected after this, after the president rallies
Speaker 4: last year ten percent for everyone else, sixty percent China
Speaker 4: even that's much better than this. So at some stage
Speaker 4: there will be that summit between between them and we
Speaker 4: will be at a better stage. So this all, this
Speaker 4: all makes sense. That that's why I'm not category three. Yeah,
Speaker 4: that's why I'm You know, we will be okay, maybe
Speaker 4: fourty eight fifty will hold, but the rest of the
Speaker 4: world and Europe will do better. If I believe that
Speaker 4: Trump wouldn't blink because of ideology, whatever, If I believe
Speaker 4: that power will say your problem, not even q E,
Speaker 4: and if I believe that China would play a very
Speaker 4: very even even a tougher hand, then I would fear, Yeah,
Speaker 4: I would fear breaks it or owe it like seeings
Speaker 4: more I don't.
Speaker 2: I just have one last question. It's kind of a curveball,
Speaker 2: and I'm certainly not asking you to like make your
Speaker 2: call or trade.
Speaker 4: You know.
Speaker 2: One thing that I've noticed though over the last couple
Speaker 2: of weeks is that bitcoin has not actually been as
Speaker 2: tech stock likes it. I used to joke that bitcoin
Speaker 2: traded like three tech stocks in a trench code. And
Speaker 2: I'm wondering, when you talk to people, we all know
Speaker 2: it's a speculative trade whatever, that's my point, But when
Speaker 2: you talk to people, particularly in ems, do you get
Speaker 2: the sense that people take it for real as a
Speaker 2: monetary asset, that they want to have some allocation to
Speaker 2: it that's separate from all of this.
Speaker 4: Can I answer that and then add one more team
Speaker 4: that I wanted? Yeah, So bitcoin answer is it was
Speaker 4: just going to It was about to become even more
Speaker 4: serious in a good sense. It was becoming even more
Speaker 4: of a digital goal. Not just my some of my
Speaker 4: dear client friends and their big PA portfolios, but some
Speaker 4: institutionalization was taking place because of what they believed Trump
Speaker 4: would bring to the table. But then my answer to
Speaker 4: Tracy on credibility on time, there's the reason why all
Speaker 4: these you know, if he did these China Canada tariffs
Speaker 4: on Gen twenty, we would probably want to trade first
Speaker 4: at one or two euro dollar. Now we're trading at
Speaker 4: one fifteen because crediblity is gone. Yeah, a little bit
Speaker 4: similar now with the whole bitcoin situation, back to the
Speaker 4: back of the class. If you're a big believer on
Speaker 4: a big bounce in the market, maybe you would you know,
Speaker 4: trade it in your own portfolio, etcetera, et cetera. But
Speaker 4: some of the funds getting by and seutside getting more
Speaker 4: serious about it as an asset in an institution site.
Speaker 4: I think that took a hit this other team that
Speaker 4: I want to bring up so that I don't regret
Speaker 4: tax cuts. So you know that again talking about a
Speaker 4: big veteran, you know, one of us big marketplayer best.
Speaker 4: And there's the reason why he's saying, literally saying to
Speaker 4: your colleague Hordern, this whole year has been tariff start
Speaker 4: of tariffs. We need to talk, you know, it's all.
Speaker 4: We need to talk tax cut, tax cut, the regulation,
Speaker 4: the reregulation. Well you're the man, you're going to change
Speaker 4: the errative to that. So he's claiming that they're moving
Speaker 4: fast on that, like in Tromp one point zero. That's
Speaker 4: going to be important. Whether it's going to be just
Speaker 4: the extension of the existing tax cuts or will he
Speaker 4: beyond tips and stuff? Will he bring something new to
Speaker 4: the table. We can discuss whether that's good or not,
Speaker 4: whether this thing, this economy is morphisic cleansing. But yes,
Speaker 4: if they beyond words, if they can succeed on changing
Speaker 4: the narrative from tariff madness to more the how tax
Speaker 4: cut deregulation, how fast it is going passing, can it
Speaker 4: be done before July fourth, et cetera. And that's going
Speaker 4: to help the very not the not well, not what
Speaker 4: the screens are telling you now, but that would help
Speaker 4: a SMP and.
Speaker 3: NASA even there though we're getting confused mixed signals.
Speaker 1: Right.
Speaker 3: We had a story overnight where the Trump administration was
Speaker 3: said to be looking at tax hikes for people earning
Speaker 3: more than a million dollars a year. So I can
Speaker 3: see why people have forgotten like that part of the narrative,
Speaker 3: because it is a little bit confused.
Speaker 4: If you look for Trump two point zero, it has
Speaker 4: been for the economy team, it has been a stumbling stock,
Speaker 4: stumbling start, Like they.
Speaker 3: Haven't a stumbling start and a stumbling stock exactly.
Speaker 4: It hasn't be on the statement, It hasn't been a
Speaker 4: Michael Phelps stuck.
Speaker 2: It was InterMine. Thank you so much for coming on
Speaker 2: odd looks. This is like the perfect moment, perfect guest.
Speaker 2: Really appreciate it.
Speaker 3: Thank thanks so much.
Speaker 4: That was fun.
Speaker 2: It was a lot of fun. That was a fun conversation.
Speaker 2: I like the sort of the three the three scenarios
Speaker 2: that he laid out. And you know, I don't like
Speaker 2: everyone else. You know, I changed my view now that
Speaker 2: anyone should ever listen to my view because I've never
Speaker 2: gotten anything right. But whatever I feel like usually like
Speaker 2: changes by the hour at this point, Yeah.
Speaker 3: Which I think is fair, right, Like, that's the reasonable
Speaker 3: response to the flood of news headlines that we're getting.
Speaker 3: I should I feel like we should just add odd
Speaker 3: lots does not provide any trading again US right, this
Speaker 3: is our disclaimer. But that said, I do like one
Speaker 3: thing that seems certain to me really is the higher
Speaker 3: term premium in the treasury market and the idea of
Speaker 3: a steepener also because like I think the US is
Speaker 3: just gonna have to issue like even more short term
Speaker 3: over time for a variety of reasons, one of which
Speaker 3: could be foreign investors stepping away from the treasury market
Speaker 3: more than they have already been doing. So that's one
Speaker 3: to watch. And then just on the Bitcoin point that
Speaker 3: you were making, I've been thinking about this too over
Speaker 3: the past couple of weeks, Like I have been eagerly
Speaker 3: waiting to see what the next big bitcoin talking point is,
Speaker 3: because this is one of the one of the real
Speaker 3: strengths of bitcoin is it always comes up with a
Speaker 3: new narrative, right and like, well.
Speaker 2: It can't be Yeah, it's kind of people have called
Speaker 2: it gold.
Speaker 3: Kind of digital goal, and it's like.
Speaker 2: People should look at the chart. It's not trading as
Speaker 2: bad and as nazdak like as it had been fun yeah,
Speaker 2: which makes me wonder if it's a little bit acclaring
Speaker 2: to some of those save had properties people supposedly claim.
Speaker 3: Yeah, but it needs something like pithy for Trump tariff world,
Speaker 3: and we're still waiting for that. But I'm sure there
Speaker 3: are people working on it right now.
Speaker 4: You Know.
Speaker 2: The other thing is when I think about all of these,
Speaker 2: so there's two things that I think about. One is
Speaker 2: there is this scenario that I don't think gets talked
Speaker 2: about as much, which is like the global depression trade
Speaker 2: or the global recession trade, right, And so the idea
Speaker 2: that it's so disruptive and the US is so important
Speaker 2: that the idea of it just being like a sort
Speaker 2: of US recession, which many people obviously think, it actually
Speaker 2: not that it actually is something.
Speaker 3: Which seems like a realistic possibility.
Speaker 2: And then the other thing is that like when everything
Speaker 2: looks sort of bleak and there really isn't much cutting
Speaker 2: edge tech in Europe and US is maybe shooting itself
Speaker 2: in the foot, and there are limits to the degree
Speaker 2: to which anyone can really invest in China. It's not
Speaker 2: surprising that gold is now perceived like that's the one thing, right,
Speaker 2: Like the one thing that will be there for you
Speaker 2: is if you have a yellow, shiny metal in your safe,
Speaker 2: and it's not surprising that that's railing.
Speaker 3: Plus gold is just shiny as you really nice, right, Yeah,
Speaker 3: it has that physical attraction, that sense of comfort in
Speaker 3: times of uncertain Well, you know.
Speaker 2: We went to the jewelry the jewelry store, I guess
Speaker 2: that was like February or March or whatever, and I
Speaker 2: would try it on that seventy five thousand dollars gold necklace, and.
Speaker 4: I regret I get really dumb not.
Speaker 2: Buying it because a bunch of people told told me
Speaker 2: it look good on me. But be more importantly, that'd
Speaker 2: be like an eighty five thousand dollars gold necklace today.
Speaker 3: Joe, you know we're not that far from one of
Speaker 3: London's jewelry districts. We can we can go shopping right
Speaker 3: after this. It's about ten minutes away.
Speaker 2: I'm really underweight gold, Tracy, so I might actually I.
Speaker 4: Might have to do that.
Speaker 3: All right, shall we leave it there?
Speaker 4: Let's leave it there.
Speaker 3: This has been another episode of the All Thoughts podcast.
Speaker 3: I'm Tracy Alloway. You can follow me at Tracy Alloway.
Speaker 2: And I'm Joe Wisenthal. You can follow me at the Stalwart.
Speaker 2: Get more of Ozone's thoughts, check out his LinkedIn ozon
Speaker 2: Tarman check him out there. Follow our producer's Carmen Rodriguez
Speaker 2: at Carmel Erman, Dashel Bennett at Dashbot and Kelbrooks and Keilbrooks.
Speaker 2: Thank you to our London producer Moses Ondam More Oddlovs
Speaker 2: Coontent Go to Bloomberg dot com slash odd lots, where
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Speaker 4: Eight